Amazon on Wednesday announced it will shut down Amazon Care—its primary care service sold to employer health plans—by the end of the year. Advisory Board's John League and Ty Aderhold detail what this move suggests about Amazon's health care ambitions.
Amazon Care was first offered exclusively to Amazon employees in Seattle in 2019. In September 2020, the company expanded access to all Amazon employees in Washington state and then expanded telehealth services to its employees and other employers in all 50 states.
Amazon Care offers both virtual and in-person care. People can access virtual care through the Amazon Care app, which allows them to communicate with providers through videos and messages. For its in-person service, a medical professional is dispatched to a patient's home or office to perform exams, tests, or vaccinations.
Last year, Amazon announced it had reached deals with Precor and Hilton to provide its Amazon Care service.
Amazon announces it will shut down Amazon Care
In an email to employees, Neil Lindsay, SVP of Amazon Health Services, said the company has "determined that Amazon Care isn't the right long-term solution for our enterprise customers and have decided that we will no longer offer Amazon Care after December 31, 2022."
"Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn't going to work long-term," Lindsay wrote. He added that the "decision wasn't made lightly and only became clear after many months of careful consideration."
Lindsay emphasized that Amazon remains committed to its health care businesses. "Our vision is to make it easier for people to access the health care products and services they need to get and stay healthy. We know accomplishing this won’t be easy or fast, but we believe it matters," he said.
Roughly 400 employees work for Amazon Care, the New York Times reports. According to Lindsay, "many" will find new roles within Amazon, and the company intends to "support employees looking for roles outside of the company."
Amazon did not say to the Times whether employees will be laid off if they can't find a new role within Amazon. But according to the Washington Post, dozens of employees will lose their jobs, with some departing as soon as October.
Many experts said Amazon's move was unexpected, especially in light of their recent expansion into health care, including their $3.9 billion purchase of primary care provider One Medical in July.
"I'm surprised," said Paddy Padmanabhan, CEO of Damo Consulting. "But I can think of a lot of reasons why they would do that."
Primary care can be difficult and is often a "loss leader" for health care organizations, Padmanabhan said. He added that he's curious to see whether Amazon decides to exit the primary care business entirely, including pulling its offer for One Medical, or if Amazon will elect to use One Medical as the foundation for all of its primary care efforts.
"This decision by Amazon to throw in the towel must come as vindication to those who believed that the healthcare business is just too complex, even for a company like Amazon," Padmanabhan said. "This raises the question of whether anyone can ever be successful as a stand-alone primary care provider in healthcare or whether you need to be part of an integrated health system to make it work."
Jacob Effron, a principal at venture capital firm Redpoint Ventures, said Amazon has likely realized it's easier to sell established brands like One Medical to employers, adding that Amazon Care and One Medical overlap, making it unnecessary to have both.
"When you're selling to employers, you can point to dozens and dozens of other employers that are using One Medical," Effron said. "That's why it makes sense to consolidate the employer side around it."
However, the decision may not be tied to Amazon's plan for One Medical at all, said Justin Norden, a partner at venture capital firm GSR Ventures.
"The deal for One Medical isn't even closed yet, so I would bet against that as a thesis," he said. "It's more likely that Amazon Care wasn't working and someone just decided to pull the plug." (Cohen/Perna, Modern Healthcare, 8/24; Dress, The Hill, 8/24; O'Donovan, Washington Post, 8/24; Weise, New York Times, 8/24)